Which of the Following Statements Is CORRECTσ

question 2

Multiple Choice

Which of the following statements is CORRECTσ

• A) a good goal for a firm's management is maximization of expected eps.
• B) most business in the u.s. is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.
• C) because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society.
• D) corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.
• E) the potential exists for agency conflicts between stockholders and managers.

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Definitions:

Indirect Method

A way of calculating cash flows from operating activities in the statement of cash flows by adjusting net income for changes in balance sheet items.

Net Income

The total profit of a company after all revenues, gains, expenses, and losses have been accounted for, typically within a specific period of time.

Working Capital Method

A financial metric used to evaluate a company's operational efficiency, calculated as current assets minus current liabilities.

Cash Flows

The total amount of money being transferred into and out of a business, especially considered in terms of liquidity.